Smoke and Mirrors

As anyone who follows eBay is aware, eBay raised their pricing on Store listings last week. Here are some of the messages eBay is trying to send:

1 - if you’re a media seller, put your top sellers in core auticons, and the rest on Half.com.
2 - if you have a store populated with junk that doesn’t sell, we don’t want it on the site.
3 - eBay Stores as a “platform” isn’t viable.

For #3, I think eBay is trying to, in some ways, encourage sellers to get into eCommerce — I’m actually surprised they didn’t mention their ProStores offering as part of their announcement.

eBay Stores has always been somewhat of a red-headed stepchild on eBay, and with the new fee increases, it has even less of a place on the site. I think a year or two from now, there may not be a venue called eBay Stores.

It will be: eBay Core, eBay Express, ProStores.

eBay has ended, at least temporarily, an experiment with virtually unlimited stores listings showing up in results.

In the meantime, during this experiment, every seller I’ve talked to has noticed an increase in Store sales.

Reasons cited include “buyer confusion” due to too many results. Is that the real reason?? — Usability studies show most people stay on the first page. Beyond that, many buyers stay above the fold and don’t scroll down.

As an example, I searched on “Nikon D70″. Google returned 17 million results. Yahoo returned 4 million results.
I understand that Google continuing to gain search share is separate from the eBay buyer experience, but clearly the game is not just about result count.

The key is relevance. eBay is growing beyond its “sort by closing time” roots. That’s one of the improvements eBay Express is going to introduce when it launches…

Why not rank things like Google does - based on buyer behavior?

Nothing major… Here’s a screenshot. | eBay.com

The biggest “bravo” goes to making shipping costs more prominent. This always helps.
Second most important is trying to create trust using the “Buy Safely” area.

Finally, the “Listing Details” area is going to be hidden by default. This is OK for the most part, except for the payment options. I think it makes sense to keep those somewhat prominent. The rest of the stuff in that area has always been somewhat of a “yawner”.

Will it help? Who knows….

Amazon.com Acquires Fashion Retailer | yahoo.com

Not much released, but I think this is Amazon placing a little larger bet on an Internet shopping category which seems to be on the rise.
So here’s the question - will they integrate this with their Amazon brand, which to me means “books and electronics” or keep it separate?

The trend these days seems to be multi-branded rather than a single unifying brand. One of the reasons for that is that it’s better for search optimization. The other half of it is obviously mindshare.

Amazon is generally pretty focused on technology, I wonder if there is a hidden technology play in here we don’t hear about…

Search still effective? yes and no | ContextRulesMarketing.blogspot.com

This blog mentions that those who are most effective in search use it as part of a larger strategy.

I would say this is true of eBay, comparison shopping engines, search, or almost anything in life. You wouldn’t put your entire net worth in one stock would you? So why would you put all your online growth prospects into one channel?

Google, Yahoo, eBay, Shopping.com, Shopzilla? Your answer should be: whatever works for me. As long as you are meeting your customer acquisition and/or margin targets, you should really be agnostic to the channel.

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Blue Nile | InternetStockBlog.com:

Second, during December, we saw extremely aggressive increases in the cost of online advertising. Our cost per click on Google, for example, rose by over 50% from a year earlier.

Does this point to weakness in search marketing in general, or just weakness in marketing high ASP items online? I suspect a little of both. Earlier in the call, the CEO mentioned that jewelry had a bad Q4 online. So which is it?

Our marketing efforts during the fourth quarter were skewed toward search engine advertising. Given our experience over the past few years with paid search, this seemed like a prudent decision entering the quarter. However, with increased costs for paid search in Q4, we were unable to drive as much profitable traffic as we would have expected.

This one is really interesting. The CEO views search as a worthwhile core competency to develop rather than hire an agency. This is an important trend I think. eBay, for example, has been making similar decisions. To me, this means that folks in the SEO/SEM space that are providing technology solutions have a brighter future than folks who are just providing “bodies that bid on keywords”.

As far as the first part of the question, we don’t use an agency; we do all of our own work on search. We’ve used agencies in the past, and overtime we’ve just built that capability up in-house. We feel it’s strategically an important thing to have in-house. So we have, both on the marketing side and the technology side, resources dedicated to analyzing and bidding for online keywords. And we will continue to play in that market.

Here’s a very interesting datapoint (IMO) about the international search market. Still really really early to call this one on the paid search side. This might indicate a lot of revenue upside at Google and the other players in years to come.

We do very, very little today in search internationally. Our website in the UK, we are quite happy with our website in the UK, by the way. It has got just a trickle of traffic coming into it, but it’s converting very, very well and it has been scaling. Again, it’s a relatively small base, and you can put out very large growth numbers when you’ve got a small base of sales. But we are very happy with how that has been happening. As far as competition, I think, as you get into some of the markets outside of the US, there’s almost no competition. And that’s one of the reasons we are in the UK trying to build that business. And I look back at 2005, and potentially in 2005, it was even early for us to go international.

IAC/InterActiveCorp Q4 2005 Earnings Conference Call Transcript (IACI) | InternetStockBlog.com

Summarize from the Diller himself:

Personally I think Lending Tree is a great property. Check out that awareness stat!

Lending Tree has 83% awareness among consumers. We’re going to increase marketing and we’re going to drive the acceptance of online adoption just as we’ve done in so many other categories. Online mortgage activity is a tiny fraction of the trillion of mortgage activity that goes on in this country.

We’d heard in 2005 from IAC rumors that the butler was going away, or there was going to be some major branding shift. That branding change for Ask Jeeves will happen in Q1:

Later this quarter, we’re going to relaunch Ask’s brand. We’ll continue to innovate around differentiating our core search with features and tools that people actually use. If you’re watching television, you’ll soon begin to see, hear and I think emotionally understand our new message.

Wall Street loves to hear stuff like this - big sales force growth coming.

Q2, we’re going to hugely grow our sales force. Given our enormous audience, we’ve simply got to accelerate the number of merchants in our system as fast as we can.

More info on the rebranding. Specifically, a date: February 27th.

t. I do think that search traffic, search queries are going to grow. That’s the essential purpose that under lied buying Ask. We believe that the fight for growth is a damned good one. It’s going to take us time; it’s not going to happen overnight. But you’ll see February 27th a so-to-speak relaunch of Ask and I think you’ll see about a week, 10 days after that, a very large media push; the purpose of which is to get people to use the product because we believe that if people use the product that they’re going to say, we think this is better.

Finally, go to the site and read the last question. It’s an interesting answer about the balance between monetization and user experience on Ask Jeeves in terms of the # of paid links should appear in search results.

Overstock.com Q4 2005 Earnings Conference Call Transcript (OSTK) | InternetStockBlog.com

Summarize of juicy bits for the lazy:

Can’t leave well enough alone:

Okay, Slide 4: Table of contents. This presentation is going to go on. Start with some bad and ugly things that happened in ’05. Some good things that happened and then looking forward and then four, my Jihad, I know, people seem to want to, some people never want to hear about my Jihad, I don’t even really want to talk about my Jihad anymore but some people have expressed an interest.

…probably we ran the tires down…

Folks threatening witnesses?

…here’s two aspects to this fight I am in, one is the lawsuit, now I know that there is fellow that they’re stopping at this and saying this is all nonsense, but then, we’ve got guys threatening our witnesses, we had guys calling our witnesses and threatening them, they are panicking.

Are you sure you want to mention luck on an earnings call?

Sure, on the revenue growth I can tell you should model 10% to 15% growth, just industry growth for the first 3 quarters. Just model 10% to 15% and expect our expenditures on marketing as a percentage of revenue to come down sort of 2%, 1% to 2% each quarter. And with a little bit of luck everything will be burned in and sometimes in the third quarter we’ll hit the gas again and see if we can get back on the higher growth or even hyper growth.

And eBay sellers think they pay a lot in shipping. Overstock.com pays $100M in shipping a year!

Remember, we’re likely to have to generate a total of about, close to $100 million of shipping charges this year, between the partners and the core business.

Their auctions business did 30M in GMV for FY 2005:

A - Patrick Byrne

The 60 million was for, I am sorry, we did 30 million of auction JMP for the full year and we did about 30 million of Ski West GMB for the half year.

Personally I’m curious what the difference would be is if they didn’t let their foot off the “sales and marketing” gas but rather step on the “CAPEX” gas and increase their tech hires? What would have been the Street’s reaction then?

Negative Online Experiences Poses Danger to Retailer Brands - InternetRetailer.com

Some interesting tidbits from this article:

82% of consumers polled in the 2005 Holiday Shopping: Online Customer Experience Survey, conducted by rich media applications provider Allurent said they’d be less likely to return to a site where they’d had a frustrating shopping experience…

76% of those responding to the survey saying they were more likely to buy at a site that offers rich features such as product zoom and 360-degree product views

Make sure your buyers have a good experience. Also, especially in apparel and other high-touch categories: make sure buyers can see as much of your products as possible. Allow them to see left, right, front, back, etc. And easily!